The City of Neosho believes it is owed an approximate $158,257 in tax funds from the Big Spring Plaza Community Improvement District, city manager Troy Royer announced Tuesday in a meeting of the city council.
The CID, a separate political entity established in 2006, has collected $316,513 since its inception, according to information provided to the city by CID attorney Carl Yates, following an earlier open-records request made by the city.
The city believes it is owed 50 percent of the 1 percent sales tax revenue that has been collected within the CID borders because the CID falls within a tax increment financing district.
"What happens in the TIF is the city or an entity goes out to borrow money to put in infrastructure under the premise that that infrastructure will spur growth and by having that TIF recapture, the premise is once that growth happens, the entity that spends the money gets some of that money back to pay the debt," said Mayor Richard Davidson. "We're not asking for anything special, we're asking for money to go back and pay debt that's on the city's books today, that we're going to have to pay back regardless of who pays us."
Meanwhile, Yates said in an interview last week that the CID could not verify that the city is owed those funds, and that they must first confirm that the CID and the TIF district do fall within the same boundaries.
Steve Hays, Neosho city attorney, told council Tuesday evening that he believed the CID had an approximate $25,000 in the bank, and recommended that the city bill them for the amount they believe they are owed.
"I certainly think that a bill for the amount that is due to us needs to be sent," Hays said. "I think that we need to at least proceed that route, monitor it and at some point down the road we may want to proceed with more aggressive remedies."
The CID's boundaries are Industrial Drive to the south, Lusk Drive to the west, Clemons Drive to the north and Business 49 to the south.
Hays said the CID is currently involved in litigation between the district and the Big Spring Plaza developer Barry Clark, who served as the initial chair of the CID's board of directors. He said Clark has filed a claim against the CID, while the CID is pursuing a cross-claim.
"The CID, it's my understanding, is attempting to receive funds back that appeared to have been taken by the developer, that's their allegation," Hays said. "The developer thinks that they were his funds and more are due, that's my understanding as well."
Hays said the city's sales tax is collected within the district, as well as the use tax of 1-percent, which is designated for the payment of debts stemming from the creation of the CID.
Page 2 of 2 - "I just think it's a travesty that they're collecting that tax and nobody's getting paid that should be paid and the people are still paying that tax," said councilman Steve Hart. "There's no oversight, there's nobody looking over their shoulders to enforce this. It's just a bad deal for the taxpayers."
Councilman David Ruth noted that, because the term limits of the CID board members are long expired, there is no legal board overseeing the CID at the moment.
According to the 2006 ordinance establishing the district, the CID is to be governed by a board of five directors, made up of owners, those owning real property in the district, operators, those owning a business in the district, or registered voters who own and occupy a residence within the district.
Based on that same ordinance, once a director's term expires, the slate of candidates are supposed to go before the council for approval, though Hays said that has not happened.
Yates told the Daily News in an earlier interview that the CID members were working to create a slate of candidates to present to the council.
Meanwhile, Hays noted Tuesday that because of the city's ownership of Lusk Drive, from Clemons Drive to Industrial Drive, the city is also a property owner within the CID and could appoint a city representative to the CID board.
Councilmen Hart and Charles Collinsworth both drew comparisons between the CID and the Neosho Transportation Development District, with which the city has been involved in legal disputes for several months.
"There is no accountability by this CID and it's plain to see, by the TDD, that unless the city steps in and makes these people be accountable, there is no oversight by the state or by the Department of Revenue. The taxpayers are paying a bill that they shouldn't have to pay."
"You've got handshake agreements, you've got litigation, you've got money disappearing, I don't see how any of that's good for Neosho," Collinsworth added. "And we could go down the list, there's numerous ABC entities we could talk about. They keep pushing the bowl towards you and just say 'shut up, eat your alphabet soup.' I'm going to pass."
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To read more on Tuesday evening's council meeting, see Thursday's Neosho Daily News.